SOURCE : NEW18 NEWS
Last Updated:April 05, 2025, 15:13 IST
The residential sector saw 195 per cent growth in inflows at $302.9 million in Q1, according to a report by Colliers.
The rise in institutional investments reflects India’s evolving real estate landscape, with a growing preference for structured vehicles like AIFs that offer professional management, risk diversification, and regulatory clarity, says an industry player.
Institutional investment in India’s real estate sector continues to display strong growth with inflows rising by 31 per cent to $1.3 billion in the first quarter of 2025 as against $995 million in the same period last year, according to a report by Colliers.
This growth was primarily driven by domestic investments, which accounted for 60 per cent of the total inflows during the quarter. With $0.8 billion inflows, domestic investments saw a 75 per cent annual rise and were largely focused on industrial & warehousing and office segments.
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According to the report, the residential sector saw 195 per cent growth in inflows at $302.9 million in Q1. The office sector saw 23 per cent dip in inflows at $434.2 million while industrial and warehousing saw 73 per cent growth at $307.7 million in January-March of 2025.
Binitha Dalal, founder and managing partner of Mt. K Kapital, said the rise in institutional investments reflects India’s evolving real estate landscape, with a growing preference for structured vehicles like AIFs that offer professional management, risk diversification, and regulatory clarity. Institutional investment in such large numbers in the sector re-affirms confidence of returns from the sector as well as a growing market size for investments.
“At Mt. K Kapital, we witnessed firsthand the increasing appetite for structured real estate opportunities, driven by strong fundamentals and long-term value creation, reinforcing the role of professionally managed investment platforms in shaping the sector’s future,” Dalal added.
During Q1 2025, institutional investments in the residential segment was almost thrice the inflows in the corresponding period of 2024. The segment with $0.3 billion inflows, accounted for 23% of the total quarterly investments, almost at par with the inflows in industrial & warehousing segment. Interestingly, foreign investments accounted for over half of the total inflows in residential segment during the quarter, led by select large deals.
Ankur Jalan, chief executive officer of Golden Growth Fund (GGF), a Category II Alternative Investment Fund, said despite the global uncertainties, institutional flows in Indian real estate remain strong indicating investor confidence in the sector.
“With strong growth projected in FY25, inflation declining and expectations of interest rate cuts going forward, Indian realty market has become extremely attractive for investment for global and domestic institutional investors,” he added.
While multi-city deals corresponded to an overall 31 per cent share, Mumbai, with about $0.3 billion inflows accounted for 22 per cent of the real estate investments in the country during Q1 2025. Bengaluru and Hyderabad followed closely with 20 per cent and 18 per cent share, respectively.
Experts say the momentum is expected to persist through 2025, supported by strong economic growth prospects, robust demand across asset classes and optimistic business sentiment. The easing of monetary policy may see more capital deployment.
Yashank Wason, MD, Royal Green Realty said driven by a thriving residential renaissance along the Dwarka Expressway and high demand for Grade-A workplaces in Gurugram and Noida, NCR has emerged as a clear frontrunner, collecting roughly 30 per cent of these inflows.
“NCR is positioned to lead investment trends in 2025 as a result of international capital doubling down on commercial assets and infrastructure like the Jewar Airport speeding up peripheral expansion. As institutional investors look for steady, high-yield prospects in India’s most active market, we anticipate that this trend will only pick up speed in the luxury housing, logistics sectors, Plotted developments, high street retail, farm houses and so on,” Wason said.
Sustained growth in residential prices, rising demand for luxury housing, and ongoing infrastructure developments will continue to boost institutional investments in residential real estate in the upcoming quarters.
Robin Mangla, president of M3M India, said the surge in institutional investments underscores the strength and resilience of India’s real estate sector.
“The luxury and commercial segments are experiencing significant momentum, driven by strong economic fundamentals and increasing investor confidence. As demand for premium office spaces and high-end residential developments continues to rise, these investments will accelerate the sector’s transformation. This trend not only benefits developers but also boosts employment, infrastructure, and overall urban development. With sustained investor interest and policy support, Indian real estate is well-positioned to achieve long-term, sustainable growth across key asset classes,” Mangla said.
